Wind Point Scores Two Exits

Targets: AIR-Serv; ArrMaz Custom Chemicals

Seller: Wind Point Partners

Buyers: AIR-Serv: Macquarie Capital Alliance; ArrMaz: GSO Capital Partners

Sale Price: AIR-Serv: $420 million; ArrMaz: Undisclosed

Legal Counsel: Winston & Strawn (ArrMaz), Sachnoff & Weaver (AIR-Serv)

Secondary sales continue to provide an avenue for exits. Just ask Chicago-based Wind Point Partners, which earlier this month unloaded two companies, both via a sale to a financial buyer.

The firm sold tire-inflation and automotive-vacuum vendor AIR-Serv in a $420 million deal to a consortium of investors led by Macquarie Capital Alliance Group (a unit within Australia’s Macquarie Bank), and also sold ArrMaz Custom Chemicals to New York-based GSO Capital Partners in an undisclosed transaction.

In the case of AIR-Serv, Wind Point had not formally opened up an auction process, although it received a compelling offer from Macquarie, leading to the ultimate deal. The two sides reached an agreement in early June and closed the transaction earlier this month.

Wind Point had purchased AIR-Serv in early 2003 for about $191 million, including a $67 million equity investment. The transaction, which included additional funding from co-investors, was itself a sponsor-to-sponsor transaction, as Atlanta-based Prometheus Partners was the selling party in the deal.

The investment for Wind Point, came after the group had already partnered with Greg Muldoon, a former executive with waste management outfit Browning Ferris Industries (BFI). Once Muldoon was on board, the firm then began scanning the market for deals, and according to Wind Point Principal Michael Nelson, AIR-Serv proved to be the best fit.

Nelson explained that while at BFI, Muldoon not only oversaw the kind of truck-based logistics that AIR-Serv utilizes, but also made more than 200 acquisitions. AIR-Serve, meanwhile, made 25 add-on acquisitions under Wind Point’s watch and grew by more than 20% per year.

Muldoon will be staying in place under Macquarie. The Sydney firm, according to reports, is taking a roughly 61% stake in the business, with an equity investment of $109 million.

ArrMaz Sold

Just prior to the AIR-Serv sale, Wind Point had closed the sale of ArrMaz Custom Chemicals, completing the deal on June 30th. The process began last autumn when Wind Point enlisted the help of UBS to find an exit for the company.

Alex Washington, a principal with Wind Point Partners, described that the firm began seeking an exit after the company reached the three goals the firm had set when it first launched the business.

Wind Point acquired Arr-Maz Products and Custom Chemicals Corp. in late 2003 and combined the two entities under the ArrMaz Custom Chemicals banner. It committed a total of $50 million in equity.

Wind Point soon found roughly $5 million in synergies through combining the businesses, and sought to grow the company by opening a plant in Brazil and engineering additional bolt-on acquisitions for the ArrMaz platform. The company also expanded its salesforce in Europe and China, and over the last two-and-a-half years, it more than doubled its EBITDA.

Like the AIR-Serv investment, Wind Point brought in its own executive for ArrMaz, recruiting former Arcadian Corp. CEO Doug Campbell. (Arcadian is producer of chemicals and fertilizer.) Campbell retired before the sale process got under way and has since been replaced by long-term executive Glenn Varnadoe, who ran the company prior to Wind Point’s buy. However, Wind Point still credits Campbell with helping set the course.

Both exits validate the firm’s focus on management, according to Washington. He said, “Our CEOs are unique because they really are partners… It really is a joint decision when to exit the investment. They think of it as a manager of the business and also as an investor.” —M.S.